Once up a time our parents laughed at the tinny little Japanese cars – in the 1960s companies with silly names like Toyota and Mazda could never threaten world giants like Chrysler, Ford and General Motors.

Within two decades the Japanese had moved their products up the value chain leaving their American and European competitors running scared while governments in western countries offered the new leaders of the manufacturing industries bribes to set up plants in their towns and states.

It was always obvious China would follow the same course as the Japanese, particularly given the country’s position as the world’s cheap labor supplier had a time limit thanks to the demographic effects of the 1970s One Child Policy.

If Aliyun follows the Japanese development path, the first version is terrible but within five years – the development cycle of software is a lot quicker than that of cars – Alibaba will be a viable competitor to Google and Android.

Chinese developers moving into the mobile market is terrible news for the also rans like Microsoft and Blackberry. As Apple dominate the premium mobile sector and Android the mass market, it’s very hard for those running third or lower to achieve the critical mass needed to be competitive. Aliyun makes it much harder for them to gain any traction in high growth developing markets.

An interesting aspect of the Wall Street Journal’s story is how Aliyun is aimed at the domestic Chinese market for the moment. This is part of China’s economy moving away from being overly reliant on exports, having locally made products that meet the needs and aspirations of a growing domestic economy is an important part of this process.

Exports though will remain an important part of the Chinese economy for most of this century and value added products like Aliyun will be important for China as the cheap labour advantage erodes over the next two decades.

Businesses who think their markets are protected because their quality is better than their Chinese competitors may be in for a nasty shock, just like the 20th Century auto makers who dismissed the Japanese were in the 1970s.